As Xerox PARC Turns 47, The Lesson Learned Is That Business Models Matter

A vintage mouse is seen in a display featuring the Xerox Alto personal computer at the Computer History Museum in Mountain View, California - (Photo by Justin Sullivan/Getty Images)

On the July 1, 1970, the Xerox Palo Alto Research Center opened its doors. Commonly known as Xerox PARC, the research center was set up as a division of Xerox Corporation and was given the mandate to invent the technologies of the future. At Xerox PARC great scientists, engineers and programmers were assembled and they set about the task of inventing the future of computing. They invented technologies that are so widely successful, we take them for granted today. The Ethernet, a prototype of the modern PC, the graphical user interface (GUI), a commercial version of the mouse, page description languages and laser printers were all invented at PARC.

Innovation Without Profit

During its early years, Xerox was not able to capitalize on the market potential of the research and development that was getting done at PARC. The benefit of that work accrued to other companies. For example, Apple launched the Macintosh Computer in 1984. This personal computer featured the GUI and a mouse, which for that era, was a revolutionary new innovation.

But Apple had not invented the GUI or the mouse. This brilliant work had been done by the scientists at Xerox PARC. So why was it Apple and not Xerox that was launching a product in 1984 and benefiting from PARC’s great inventions? The answer to that question lies in the fact that R&D and invention are not enough. In order to innovate successfully, companies need frameworks, tools and processes that can help them take their inventions from ideas to commercial success.

Innovation Beyond R&D

It was in December 1979, when Steve Jobs made his first visit to Xerox PARC. As part of a deal that allowed Xerox to buy one hundred thousand shares of Apple, Jobs was given permission to see the inventions that PARC engineers were working on. Jobs was blown away by what he saw at PARC. The commercial value of the technology was clear to him. So while the Xerox’s own personal computer the Alto was a commercial flop, Apple’s Macintosh became a legendary success that kickstarted a revolution.

Xerox’s failure to commercialize its own inventions was partly due to the disconnect between those ideas and its core business making copiers. Executives within the main business were disparagingly referred to as “toner heads” because of their failure to see the commercial value in new inventions that were not directly related to photocopying or printing. As such, even as their team made great technologies, Xerox failed to combine this innovation with sustainably profitable business models.